Taxable event: Taxable
event is very important matter in every tax law. Its determination is most
crucial for the proper implementation of any tax law. Taxable event is that on
the happening of which the charge is fixed. It is that event which on its
occurrence creates or attracts the liability to tax.

In the history of indirect taxation in India
we have seen different taxable events in different indirect taxes. Sales,
purchase, removal of goods, services, luxury, entertainment and so on, the list
goes on. GST i.e. goods and service tax which we are goint to witness will not only reform the whole of indirec taxes but also will
reform the way of doing business in India.

Taxable event under GST:One
of the very important feature of the regime of GST is the complete change in
the taxable event different altogether from the taxable events witnessed in the
indirect taxes as yet. The taxable event in the
GST would be supply of goods and/or services. As per Article 366(12A) of
Constitution of India Goods and Services Tax means a tax on supply of goods or
services or both except taxes on supply of alcoholic liquor for human
consumption. It is worth noting here that the word used is supply and not
sales, hence consideration is not required for supply.

Definition of supply:The
term supply has been defined in an inclusive manner under clause 3 of the
revised Model GST Law.

The
definition goes as follows:

(1)
Supply includes—

(a)
all forms of supply of goods and/or services such as sale, transfer, barter,
exchange, license, rental, lease or disposal made or agreed to be made for a
consideration by a person in the course or furtherance of business,

(b) importation of services, for a
consideration whether or not in the course or furtherance of business,

and

(c) a supply specified in Schedule I, made or
agreed to be made without a consideration.

(2)
Schedule II, in respect of matters mentioned therein, shall apply for
determining what is, or is to be treated as a supply of goods or a supply of
services.

(3)
Notwithstanding anything contained in sub-section (1),

(a)
activities or transactions specified in schedule III; or

(b) activities or transactions undertaken by
the Central Government, a State Government or any local authority in which they
are engaged as public authorities as specified in Schedule IV, shall be treated
neither as a supply of goods nor a supply of services.

(4)
Subject to sub-section (2) and sub-section (3), the Central or a State Government
may, upon recommendation of the Council, specify, by notification, the
transactions that are to be treated as—

(a) a supply of goods and not as a supply of
services; or

(b)
a supply of services and not as a supply of goods; or

(c)
neither a supply of goods nor a supply of services.

(5)
The tax liability on a composite or a mixed supply shall be determined in the
following manner —

(a)
a composite supply comprising two or more supplies, one of which is a principal
supply, shall be treated as a supply of such principal supply;

(b)
a mixed supply comprising two or more supplies shall be treated as supply of
that particular supply which attracts the highest rate of tax.

Inclusive defintion of
supply: From the above clause 3 it is clear that
the term supply has not been defined exhaustively rather it has been defined in
an inclusive manner. It must be remembered that when the word “includes” is
used in the definition, the legislature does not intend to restrict the
definition. it makes the definition enumerative but not exhaustive. That is to
say, the term defined will retain its ordinary meaning but its scope would be
extended to bring within it matters, which in its ordinary meaning may or may
not comprise.

Thus
the term supply would include within its ambit not only the matters covered
under clause 3 but also other matters which may be included by natural import.

Supply
includes all forms of supply of goods and/or services such as sale, transfer,
barter, exchange, licence, rental , lease or disposal made or agreed to be made
for a consideration by a person in the cource or furtherance of business. The
important thing to be noted here is the use of word consideration and in the
cource or furtherance of business.

However,
certain matters have also been termed as supply even without consideration as
mentioned under schedule I of the revised model GST law. Such transactions are:

(a)
permanent transfer/disposal of business assets where input tax credit has been
availed on such assets.

(b) Supply of goods or services between
related persons, or between distinct persons as specified in section 10, when
made in the cource or furtherance of business.

Import of service:Supply also
includes specifically the import of service for a consideration whether or not
in the cource or furtherance of business. However, Import of services by a
taxable person from related person or from any of his other establishments
outside India, in the cource or furtherance of business has been made taxable
even without consideration.

Supply of goods vs Supply
of services: Further certain matters have been
seperately explained to be treated as supply of goods and certain to be supply
of services under schedule II of the Model GST Law. This has been done
considering the past litigations on the issue of double taxation like in works
contract AC restaurants, intangible goods, transfer of right to use goods etc.

Matters to be treated as goods:

(a)
Any transfer of title in goods

(b)
Any transfer of title in future goods undre an agreement (hire purchase)

(c)
Transfer of goods forming part of assets on the directions of a person carrying
on business, in such a way so as not to form part of business assets with or
without consideration

(d)
Goods forming part of business assets on ceasing to be a taxble person except
when business is transferred as going concern to another person or business is
carried on by a personal representative deemned to be a taxable person.

(e)
Supply of goods by any unincorporated association to a member thereof for cash,
deferred payment or other valuable consideration(Concept of mutuality seem to be covered as well).

Matters to be treated as supply of
services:

(a)
Any transfer of right in goods or undivided share in goods(transfer of right to
use is a service)

(b)
Any lease, tenancy, easement, licence to occupy land, lease or letting out of
building including commercial, industrial or residential complex (renting of
immovable property is supply of service)

(c)
Job work on other’s goods

(d)
Business goods put to private use or making available to any person for
non-commercial purpose

(e)
Renting of immovable property

(f)
Construction of a commercial complex, building, civil structure or a part
thereof, including a complex or building intended for sale to a buyer, wholly
or partly, except where the entire consideration has been received after
issuance of completion certificate, where required, by the competent authority
or before its first occupation, whichever is earlier

(i)
agreeing to the obligation to refrain from an act, or to tolerate an act or a
situation, or to do an act;

(j)
works contract including transfer of property in goods (whether as goods or in
some other form) involved in the execution of a works contract;

(k)
transfer of the right to use any goods for any purpose (whether or not for a
specified period) for cash, deferred payment or other valuable consideration;

(l)
supply, by way of or as part of any service or in any other manner whatsoever,
of goods, being food or any other article for human consumption or any drink
(other than alcoholic liquor for human consumption), where such supply or
service is for cash, deferred payment or other valuable
consideration.(restaurant service).

There are certain activities which
shall be neither service of goods nor supply of services, such transactions are
mentioned under schedule III.

1.
Services by an employee to the employer in the course of or in relation to his
employment.

2.
Services by any Court or Tribunal established under any law for the time being
in force.

3.
(a) The functions performed by the Members of Parliament, Members of State
Legislature, Members of Panchayats, Members of Municipalities and Members of
other local authorities;

(b)
The duties performed by any person who holds any post in pursuance of the
provisions of the Constitution in that capacity; or

(c) The duties performed by any person as a
Chairperson or a Member or a Director in a body established by the Central
Government or a State Government or local authority and who is not deemed as an
employee before the commencement of this clause.

4.
Services by a foreign diplomatic mission located in India.

5. Services of funeral, burial, crematorium or
mortuary including transportation of the deceased.

Similarly certain activites undertaken
by Central or State Government or any local authority as specified in schedule IV
shall be neither supply of services nor of goods.
Schedule IV provides exhaustive list of activities such as issuance of
passport, visa, driving licence, birth and death certificates etc.

Apart
from abovce section 3(4) provides that the central or state government may on
recommendation of GST Council, specify by notification, the transactions that
are to be treated as-

(a)
a supply of goods and not as a supply of services; or

(b)
a supply of services and not as a supply of goods; or

(c) neither a supply of goods nor a supply of
services.

Taxability of Mixed and
composite supplies: Revised Model GST Law has also
provided under clause 3(5) provisions for taxability of composite and mixed
supplies as follows:

(a)a composite supplycomprising two or more supplies, one of
which is a principal sully, shall be treated as a supply of such principal supply. ExampleSupply of food
during the course of transportation of passengers by air services shall be
treated as supply of transportation of passengers by air.

(b)
a mixed supplytwo or
more supplies shall be treated as supply of that particular supply which
attracts the highest rate of tax.

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